How galleries have dealt with the crisis (and what they need to do for the future)

The current global landscape and uncertainty about the timeline for reaching a situation in which social distancing measures will no longer be necessary continue to make it complex to make meaningful predictions. In fact, only the “normalization” of the situation will be able to allow the art market world to return to satisfactory revenue levels and thus predict how much this long crisis has really impacted the habits of art users and consequently the business models in place.

The second edition of our study “The State of Art. A snapshot of the Art & Finance sector at the time of Covid,” conducted by Deloitte Private between January 11 and 29 , analyzes the sector’s business performance, perceptions and forecasts of the main stakeholders belonging to the art-cultural world: art galleries, public and private museums, users and enthusiasts, collectors, dealers and art advisors, private bankers and family offices, artists and companies operating in both legal-fiscal and technological applications for art.

The art-cultural sector is still struggling to recover from the severe crisis that has hit it due to the pandemic, a crisis well outlined by major national and international statistics.

Since the beginning of the pandemic, there has been an unprecedented increase in the number of virtual proposals and initiatives. Even galleries during the lockdown period have had to adapt to the digital world, promoting their artists through online viewing rooms and dedicated web pages, often also taking advantage of the spaces provided by various art fairs proposed for this year only in a virtual guise. Many galleries have also implemented communication strategies aimed at keeping the dialogue and relationship with the public alive, making available artistic-cultural content related to the artists promoted by the gallery itself, either through periodic newsletters or through their social channels.

However, while the virtual has helped the sector keep alive its relationships with its stakeholders, the willingness of enthusiasts and collectors to physically take part in exhibitions and displays remains undisputed. All in all, the results regarding the effectiveness of online tools in buying artworks were positive: 8 out of 10 respondents attributed medium or high effectiveness to the virtual platforms implemented or strengthened by auction houses, galleries, and art fairs during the lockdown period, which allowed the market to stay alive, albeit “behind closed doors.”

The gallery sector experienced growth in the share of sales made through online channels, but this was mainly true for large international galleries. Smaller galleries, in fact, although they have made some sales remotely, have found it more difficult to find space in the virtual marketplace, which has suddenly found itself saturated with supply. These realities went through a period of severe crisis, which in many cases continues to this day. Indeed, the personal relationship and physical contact remain fundamental in the primary art market, where the role of the gallerist is the pivotal element in the promotion and enhancement of artists.

Deloitte investigated respondents’ perceptions of the likelihood of online platforms taking the place of traditional sales channels or services in the art-cultural sector. Only 4 percent of respondents say online will replace live services by more than 50 percent, while those who say online services could partially replace live offerings prevail in a range of 25 to 50 percent. Interestingly, this perception has increased over the five months since the first edition of our study, when respondents mostly stated that online would not replace live services by more than 25%. Finally, almost all respondents said they expected that the replacement of live services by online services would occur within two years.

Liu Bolin, The Hope (2015). Courtesy: Gaburro Boxart Gallery

What are the expectations for a future that can foster the restart and further development of the art-cultural sector? The implementation of new regulatory tools aimed at fostering private support for the art-cultural sector, such as tax breaks, is the variable that respondents believe could give the sector the greatest impetus.

Another possible lever for restart may be the creation of new marketplaces for small and medium-sized entities, which confirm that collaboration and synergy between different organizations are key elements for the future of the sector. Collaboration, especially among small-to-medium sized entities, can help optimize costs and broaden the audience to which they can address their offerings.

Great strides have also been made in this area, especially in the art gallery sector. Looking at the Italian context, for example, it is possible to mention the collaboration of 17 of the most active and influential galleries in Milan, which have launched Milan Gallery Community, an online project launched in partnership with Artsy, a major virtual platform dedicated to the online marketplace for artworks that has chosen Italy to inaugurate the launch of its Artsy Communities.

It is also interesting to note a correspondence between the responses provided by users of digital sales platforms and the operators who have “embraced” the digital channel: in line with the 47% of respondents who said they found online platforms effective for buying works of art, 62% of operators in fact confirmed that online tools were very effective in making up for the impossibility of offering live services.

Looking at turnover and possible market closing figures for this very complex year for all international socio-economic systems, the Pulse Survey reported a sentiment for the future that is not rosy. Despite the fact that organizations have now become accustomed to new labor standards 44 percent of respondents predict that for 2021 turnover will remain about 25 percent lower than at year-end 2019, worryingly increasing those who predict a 50 percent reduction in turnover (44 percent).

As with other sectors, it will probably have to wait until 2022 to see a recovery, but it is critical right now to lay the groundwork for this to happen, through continued innovation of tools to keep its market presence alive.

This contribution was originally published in No. 9 of our print magazine Finestre Sull’Arte on paper. Click here to subscribe.

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